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#MondayMotivation: Theory of Pricing Relativity

Looking for a little #MondayMotivation? We’re pulling out past stories that are still just as relevant today. Here’s a pearl from Jim: Tickets Are Worth Different Amounts to Different People.

If you were riding on a train and you dropped a rock from the window of that train, it would appear to you as if the rock is falling to the ground in a curving arc behind you as you travel. If your friend were standing outside the train, facing the tracks, and watched you riding by when you dropped your rock, that rock would appear to her like it was falling straight to the ground.

Photo Credit: Katie Harp via Unsplash

Who’s right? Who sees what’s really happening to that rock?

You both are. It’s not a trick your eyes play on you or one of those patterns where if you stare at it for long enough, you see Jesus. You’re both actually correct in your perception of how the rock is traveling because the motion is relative to you.

I didn’t think of this example. I borrowed it from Einstein, but we’re going to use it, believe it or not, to talk about selling tickets. I call it the Theory of Pricing Relativity, and it goes like this: No ticket is “worth” a fixed amount. It’s only worth something relative to the person who might buy it.

When you say something like, “This show on a Saturday night in the P1 section should be about $85,” what you’re really saying is that for the typical person who is likely to be the audience for this show (we’ll say it’s a band called the Time Travelers), your intuition or information tells you that they would find $85 to be an acceptable price, or close to an acceptable price. And you might be right. You probably are. You’re very smart. And good looking. I should say that more often …

Anyway, let’s call the typical person in the group you just described Alex. You have a clear understanding of Alex and what she’s into and what she’s likely to pay. She knows the band, likes them and should place some value on seeing them. You think $85 for P1. …